The management believes that the firm has more than enough available liquidity to sustain its multi-quarter turnaround efforts.

Cash, cash equivalents, and short-term investments were $483 million at quarter end. Sequentially, this was up by about $59 million from $424 million at the end of the second quarter. As compared to the end of the third quarter last year, the balance declined by $415 million, principally driven by $315 million in cash used to purchase PP&E and $174 million to repurchase stock and pay dividends. These uses of cash were partially offset by proceeds of $66 million from the sales of property and equipment.

The firm’s amended credit facility would have an initial term of five years, is not conditioned on a successful syndication, and otherwise carries no financial covenants. This amended facility enhances the firm’s liquidity and flexibility and demonstrates that it continues to have adequate access to the capital markets.

Consolidated merchandise inventories at quarter end were relatively flat with last year, even including the addition of 28 net new superstores.

The third quarter overall in-stock rates were approximately flat to the prior year, while in-stock rates for items in promotions improved substantially. Net owned inventory was flat compared to the prior year despite our slower sales.

During the third quarter, the firm didn’t buy back any shares and to date, it has repurchased 60 million shares for $966 million at an average cost of $16 per share.

The firm has 234 million remaining under its current Board authorization. The firm opted not to repurchase stock during the quarter for several reasons, but primarily was the desire to maintain a strong level of cash on the balance sheet given the uncertain macroeconomic climate.

During the quarter, the company completed 21 domestic superstore openings.

The firm is on track to open 61 to 63 incremental and relocated domestic superstores this year. Of the stores opened in the third quarter, six are The City Stores, which are the next generation format. The City is more than just a better-looking store. The City is about fundamental change in the customer value proposition and transforms the experience for consumer electronics retailing into a seamless multi-channel journey with full service solutions. The differentiated experience also enables the firm to recruit and retain the most talented associates. The changes are significant and the initial data indicates that the customers and associates significantly prefer the approach over the previous model.

The leadership team in Canada has continued to gain traction on their transformation efforts.

InterTAN improved its operating income five fold despite lower comp sales. Driven by improvements in gross margin, the team has done a solid job executing the plan over the past year. The firm is exploring its strategic options to maximize shareholder value with this asset and after pausing for the holiday season, it expects to revisit the plan in January.

The Board of Directors has approved a cash retention plan for all associates director level and above to help retain key members of the leadership team through the turnaround.

In addition to the cash retention plan, the Board approved long-term stock awards under the company’s existing incentive plan. These stock-based awards align these individuals’ compensation with the company’s performance. Together, these actions bring the total rewards and compensation in line with the benchmark target set forth in the firm’s compensation philosophy.

Outlook

Assuming that current sales and margin trends continue for the balance of the fourth quarter, the company expects to deliver a modest loss from continuing operations before taxes for the quarter.

On the pipeline for store openings in fiscal 2009, the firm has eliminated some specific sites that were not expected to deliver acceptable profitability. The firm’s real estate team worked very diligently to shift the timing of store openings later in the year in order to maximize the economic contribution of the stores to the year’s results or into the following fiscal year if they could not be completed prior to the holiday. The firm continues to refine its pipeline for fiscal 2009, but it currently expects to open 50 to 60 new and relocated stores. In total, the firm is planning domestic segment capital expenditures for fiscal 2009 to be within the range of $150 million to $200 million.

For fiscal 2009, the company is focused on fixing its gross margin rate through merchandising, marketing, and pricing discipline; fixing its expenses to achieving its targeted reductions for next year and further aligning its work streams with its strategic goals; fixing the close rate and attachment by empowering its sales associates with the necessary knowledge and tools which improves both sales and margin; growing the business by expanding the sales of its Fire Dog services and direct channel businesses and relocating, remodeling, and selectively opening new stores. The firm remains committed to a strategy that leads to improve sales and profitability in the near and long term.

Key questions from the third quarter fiscal 2007 earnings call conducted by Circuit City Stores Inc. on December 21, 2007.

Danielle Fox (Merrill Lynch): Could you compare and contrast some of the changes you’ve made in the plan for executive compensation with some of the changes you’ve made to associate compensation?

Bruce H. Besanko: September of last year we put a program in place for all management in the company, including our store directors and above, and I would characterize this as a retention program but also as an incentive for them to perform and it was incremental to their base and standard bonus program. The retention program was aimed at retaining the leadership necessary to continue this difficult turnaround. Over the course of the last three years, I’ve reassembled the management team and underneath our senior-most managers, they’ve assembled a set of senior vice presidents, vice presidents, and directors to lead this transformation. This is very difficult work and that takes continued commitment and in light of the recent difficulties, it was necessary to put a retention vehicle at all levels. The base program that we have in place was a combination of stock options and restricted shares. Because of the current stock performance, that program for many of our executives was underwater and so far underwater that it didn’t have any meaningful value over time. In addition to that, our senior most executives did not receive a bonus for the last two years and will not receive a bonus based on this year’s performance. We have two plans now to retain those leaders. One is our cash-based retention program and two is a stock-based incentive program which is in line with our annual stock-based incentive program.